Despite a cyberattack, MGM surpasses Q3 earnings and presents a fresh $2 billion buyback scheme.
Shares of MGM Resorts International experienced a slight increase in after-hours trading on Wednesday following the release of third-quarter results. Despite the negative impact of a cyberattack in September, the largest operator on the Las Vegas Strip managed to exceed analyst expectations.
The company reported earnings of 64 cents per share on revenue totalling $3.97 billion for the July-September period. Analysts had predicted earnings of 49 cents with revenue of $3.89 billion. After informing investors in October that third-quarter EBITDAR would be reduced by $100 million and incurring at least $10 million in one-time costs as a result of the cyberattack, MGM displayed confidence.
Chief President and CEO, Bill Hornbuckle, stated, "We started the quarter with great momentum across our businesses. Although we faced a challenging cybersecurity issue in September, our staff exhibited incredible resilience and determination. Having overcome the challenge, we're a stronger company.”
During the third quarter, MGM's net revenue on the Las Vegas Strip fell to $2.1 billion, compared to $2.3 billion in the same period a year earlier. The decline was mainly due to the cyberattack and the sale of the Mirage, which was completed over a year ago.
MGM's domestic regional casinos recorded a drop in net revenue to $925 million, down from $974 million a year prior. Factors contributing to this decline included the ransomware attack and the sale of Gold Strike Tunica in February.
MGM Prepares for Buybacks
For several years, MGM has consistently purchased its own shares, signalling to investors and analysts a belief in its own stock's value. This trend continues. The company repurchased $572 million worth of its own shares during the third quarter and announced a new $2 billion buyback program.
This launch of a $2 billion repurchase plan comes less than nine months after MGM's board approved a program of the same amount, highlighting the operator's commitment to delivering on its buyback promises.
CFO Jonathan Halkyard remarked, "We continue to view share repurchases as an attractive way to return value to our shareholders. To date, we've repurchased approximately $1.7 billion in stock. Our total buyback plan now amounts to $6.2 billion since the beginning of 2021, reducing our share count by over 30%."
Having suspended its dividend during the initial stages of the COVID-19 pandemic, MGM favours buybacks as the primary means of rewarding shareholders. Share repurchases are generally more efficient for investors and facilitate boosting earnings per share (EPS).
MGM Keeping Eyes on Future
With the Las Vegas Grand Prix just around the corner and talk increasing about Strip operators lowering room rates and Formula One doing the same with ticket prices, MGM expressed an optimistic outlook on the highly-anticipated return of F1 to Sin City.
Hornbuckle revealed MGM had sold out the Bellagio Fountain Club for the event and sold an additional 10,000 tickets beyond that, projecting the race weekend to be a record-breaking one for MGM Strip casinos.
Finally, MGM anticipates a labour strike deal to be finalized by the end of the day and anticipates making further investments in the MGM Grand if the Oakland Athletics proceed with their relocation to Las Vegas.
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Source: www.casino.org
